(CBS) — President Donald Trump on Wednesday made a confusing foray into the world of tax policy, informing his nearly 33 million Twitter followers that “#AmazonWashingtonPost” doesn’t pay “Internet taxes.” In doing so, the president is escalating a simmering feud with The Washington Post and Amazon (AMZN) CEO Jeff Bezos, who owns the paper. Bezos bought the Post in 2013 for $250 million, and it’s a separate company from the e-commerce giant.
The tweet may have been prompted by a Post story on Tuesday that said at least some of Mr. Trump’s country clubs are decorated with phony Time magazine covers featuring Donald Trump.
During the presidential campaign, Mr. Trump denounced the Post as Bezos’ “toy” and argued that Amazon “is getting away with murder tax-wise.” He also accused the entrepreneur of using the newspaper to further his political agenda. Bezos has repeatedly denied interfering with the Post’s news coverage. Amazon didn’t respond to a CBS MoneyWatch request for comment for the story, and the Post declined to comment.
However, according to tax policy experts, Mr. Trump’s characterization of Amazon’s tax situation is out of date and unfair. While the Seattle-based company fought for years against efforts to collect sales tax on internet sales, Amazon now does so in all 45 states (plus the District of Columbia) that levy sales taxes, even though it’s not legally required to.
Amazon changed its earlier tune on sales taxes because its business model evolved to require timely deliveries for perishable goods and other products, according to Karen Reuben, a senior fellow in the Urban-Brookings Tax Policy Center.
“It’s self-interest,” she said. “They’re being good citizens, and they’re collecting the taxes and remitting it. … If you want more and more of your deliveries to be done in a day or two, you actually need warehouses and physical presence in places to get your goods to other places.”
Those physical presences are key to internet retailers’ tax situation: They’re required to pay sales taxes in states where they have a physical presence, and Amazon’s have grown dramatically in recent years as it has cranked up the speed of its deliveries.
Amazon now leases or owns offices, warehouses, data centers and fulfillment centers all over the country, according to its latest annual report. This month it also announced plans to acquire for $13.7 billion organic grocer Whole Foods (WFM), which has more than 400 physical stores in the U.S.
The e-commerce giant reported $2.36 billion in operating income last year and a loss of $1.28 million from its international operations. That’s unusual for a multinational company, which typically reports losses in the U.S. and profits overseas, where corporate tax rates are typically lower, according to tax expert Robert Willens, who advises hedge funds and other large investors.
“That’s exactly the opposite of what you would expect to see from a company that is trying to minimize its taxes to the greatest extent possible,” Willens said. “They’re paying more than you would expect them to pay.”
Amazon recorded a “provision” of $1.4 billion to pay taxes in 2016, an increase from $167 million in 2014 and $950 million in 2015. Provisions are estimates companies make about their tax liability and are accounted for differently than the taxes they actually pay, which depend things like the deductions they take for depreciation and capital expenditures.
In Amazon’s case, it paid $412 million in cash taxes in 2016, an increase from $273 million in 2015 and $177 million in 2014. The Seattle-based company also had about $608 million in federal tax credits at the end of last year available to offset future tax liabilities.
“They don’t have anything to be ashamed about,” Willens said. “They try hard to minimize their tax bill, and they do use all of the sophisticated techniques that many other multinationals use.”